The Tobin Tax: how to make it real

• In its first phase, the system would consist of the euro-EU and a group of other countries EU. However constituted, this grouping should establish an open agreement (any state can join at any time – and a supranational body orchestrating the tax and collecting the revenues of a small underlying transactions tax (10 basis points, at most); much bigger exchange surcharge (1%-3% or even more); and a relatively high tax, perhaps 1%, on domestic-currency lending to non-residents (only to non-residents who are not yet within the tax regime). This arrangement would solve the tax evasion problem and is economically sound
• In the second phase, which should be carried out either when all major financial centres and most other countries have joined the first phase system, or at latest by, say, year 2010, a universal and uniform Tobin tax at a higher (yet absolutely low) 1% rate would be applied. This would make it possible for any grouping of countries to proceed quickly without the consent of every state.

The article makes the following suggestions with regard to the allocation of revenues:

• collecting states should get a fair share of the revenues themselves,
• dedicate a relatively small part of the revenues to the UN system
• decisions about revenues will follow public, transparent, fair and democratic procedures, and that the decision-makers are strictly accountable for their actions both to the member-states and the wider, democratic world republic